Flipping through a business magazine in a Doctor's office recently, a piece on the increasing disparity in incomes caught my eye. The journalist was at a loss to explain why disparities were getting larger rather than smaller.
Not too long ago, a comment to the effect that it didn't matter how much we borrowed as long as we borrowed it from ourselves was attributed to P. E. Trudeau. This as a rationalization of deficits.
Recently a quote on the just society was attributed to Justin Trudeau.
These three seemingly disparate ideas may be connected.
From readings of monetary theory a half century ago, there's the notion that the burden of the public debt is borne by those who incur the debt. If the borrowed resources had not been diverted then they might have been applied to some other purpose. According to this, the burden of the debt is not incurred by those who have to pay it back. In a sense, this may be correct.
The notion that it doesn't matter how much we borrow as long as we borrow it from ourselves is patently incorrect. When deficits are financed, they are financed by people who have money. You can't borrow from people who are broke. When the debt is serviced and/or retired, everybody gets to contribute and regressive fiscal policies like sales taxes, lotteries, most user fees and licences, gambling revenues, payroll taxes, etc. insure that everybody gets to contribute.
There's no particular reason why countries like Greece and Ireland can't go on borrowing forever under the Trudeau notion. However, at some point in time, the working stiffs who are required to service these obligations must be starved into oblivion. Then the people holding the debt will also have to service it which kind of defeats the purpose of the exercise.
Whether he meant it or not, Pierre Trudeau's just society was just for people like him – people with money to lend. It's not so just for the people who have to pay it back.
It's amazing that with billions, if not trillions, spent on universal public education, the product is a semi-literate people who are incapable of maintaining, let alone improving, their standard of living in a country as rich in resources as is Canada. The huge and increasing deficits of federal and provincial governments are, in large part, responsible for the income disparities which see the rich getting richer and the poor, not so much. The inflexibility in the labor force which is reflected in enormous unemployment or underemployment also says much about the effectiveness of the investment in education.
If there is any interest in continuing the notion of a free economy with a reduction in income disparities, then the debt must be reduced to what is required for manipulation of the money supply. This could take a generation or more without superfluous spending on education, overly generous notions about medicare, elaborate pensions for public servants, grandiose plans for sporting events, or whatever. The alternative is the destruction of the very foundation on which the Country has been built. There will be no guarantees of rewards for hard work, only more taxes to service the ever increasing debt.
Any liberal notion that we're somehow going to be better off if governments spend more is false. Until the debt is retired, more government spending will only result in further income disparity.
C. R. (Ray) Luft
Mississauga, ONT
